Labor is defending its flagship housing policy amid criticism the expanded first homebuyer scheme is inflating property prices far beyond Treasury’s forecasts.
Treasury modelling suggested the scheme – which allows Australian first homebuyers to get a foot on the property ladder with just a 5 per cent deposit and avoid lenders’ mortgage insurance – would lift property prices by only 0.5 per cent over six years.
However, new figures from Cotality’s Home Value Index showed national dwelling values jumped 1.1 per cent in October alone after the scheme kicked in. This is the fastest monthly rise in more than two years.
In its first month, 5,778 properties were purchased under the program, with median prices at $710,000, which is below the national median of $870,000, according to government figures.
It’s estimated that around 57,000 properties are sold nationally each month and the government argues the number purchased using the scheme is a small fraction of total sales.
Housing Minister Clare O’Neil said the uptake is ‘squarely in line with Treasury estimates’ and that the scheme is helping Australians ‘pay off their own mortgage’ rather than paying someone else’s by renting.
Critics, however, accused the government of ‘cooking’ its housing policy data.
The main area of concern is around the lower end of the market, where most buyers using the scheme were likely to be concentrated.
The Albanese government introduces an expanded first homebuyer scheme last month (pictured Anthony Albanese with Climate Change Minister Chris Bowen)
Andrew Bragg (pictured) accused the Albanese Government of ‘cooking’ housing policy
Liberal Senator Andrew Bragg claimed the scheme was having the opposite effect from what was intended.
‘Labor have created this uncapped, non-means-tested 5 per cent deposit scheme and that is really hurting entry-level first home owners,’ Bragg said.
‘Prices have gone up, the biggest leap in entry-level house prices in years’.
The surge coincides with the scheme’s October 1 expansion, which removed income caps and raised property price thresholds to as high as $1.5million in Sydney.
Cotality reports that October’s 1.1 per cent spike marks the sharpest monthly increase since mid-2023, with Perth and Brisbane leading gains at 1.9 per cent and 1.6 per cent respectively.
Tim Lawless, Cotality’s research director, warns the scheme could add 5 per cent to prices over the next year, particularly in lower-priced areas.
‘We’ll probably be seeing more substantial price pressures around that middle to lower end of the marketplace,’ he said.
The Opposition is demanding the Albanese Government release the full Treasury modelling behind its 5 per cent deposit scheme, accusing it of withholding critical information from the public.
The information is not yet public, despite the government being ordered by the Senate to release the document earlier this year.
Clare O’Neil (pictured) has refuted claims the scheme will have a major impact on house prices
Bragg labelled the modelling a ‘secret document,’ claiming the government is ‘covering up’ projections that have already proven inaccurate.
‘Treasury said prices would rise just 0.5 per cent over six years, that’s already wrong,’ Bragg said on Wednesday.
During Question Time on Wednesday, Foreign Minister Penny Wong pushed back against the criticism, accusing Bragg of ‘fear mongering.’
She insisted the government had ‘provided the information’ about the modelling, despite not releasing the full document publicly.
Wong also said that there was more than just one factor that impacted house prices, implying other issues were at play for the rise in prices in the last month.
The five per cent deposit scheme was first introduced by the former Coalition government, but it was restricted to a limited group of low-income buyers. Those caps were lifted by Labor on October 1.